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Balance Transfers

How to do a balance transfer when you have bad credit

Transferring a balance when your credit is not stellar can be hard but not impossible – and you might have other options to pay down card debt

Summary

If you’re looking for options to pay off card debt but you have poor credit, your options might include transferring the balance to a secured credit card. Here’s what you need to know in order to make the right choice.

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Balance transfer offers can help you save money while paying off credit card debt if you’re able to lock in a lower rate for an extended period of time.

There’s just one little wrinkle: the best balance transfer promotions are often reserved for people with good to excellent credit. There is good news, however. Balance transfers for bad credit do exist, and these tips can help you find the best terms for transferring a balance if you have less than perfect credit.

See related: Best balance transfer credit cards

Review your credit report and score first

Credit card issuers typically don’t specify an exact credit score you need to qualify for a balance transfer offer. But some may indicate what credit range is needed for approval that you can use as a guideline for comparing cards.

“Getting a balance transfer with bad credit is difficult but not impossible,” says Leslie H. Tayne, a consumer debt attorney and founder of Tayne Law Group. “However, it will be incredibly difficult to qualify for the most competitive 0% APR options.”

Before you start shopping for balance transfer offers, consider checking your credit report and credit scores through a free credit monitoring service. Then, look at where you land on the credit score range.

According to myFICO, for instance, poor credit is generally a score that falls below the 580 mark. Checking your credit can give you an idea of which cards you may have the best shot at getting.

Consider balance transfer secured cards

Once you start your search for a balance transfer card, you might find that the field is limited.

“If you have bad credit, you likely won’t be approved for an unsecured credit card,” says Jared Weitz, CEO of United Capital Source.

You may have to settle for a secured credit card instead. These cards represent some of the best secured card options for bad credit balance transfers:

Balance transfer secured cards for bad credit

Card NameBalance Transfer OfferFeesOther Card Details
Discover it® Secured10.99% introductory APR on balance transfers for the first six months. After that, a regular variable APR of 24.49% applies.Introductory fee of 3% of the amount of each transfer. After that, up to 5% of the amount of each transfer, see terms. $0 annual fee.Your deposit equals your credit line. Earn 2% cash back at gas stations and restaurants, on up to $1,000 in purchases each quarter – 1% back thereafter. Earn unlimited 1% cash back on all other purchases.
Capital One® Secured Mastercard®26.99% variable APR applies to all balance transfers.$0 balance transfer fee. $0 annual fee.Minimum deposit of $49, $99 or $200. Make your first five monthly payments on time to get access to a higher credit limit.
UNITY Visa Secured Credit Card9.95% introductory APR for the first six months. After that, a regular fixed APR of 17.99% applies.Either $10 or 3% of the transaction amount, whichever is greater, up to a maximum of $150. $39 annual fee.Minimum credit limit is $250, maximum limit is $10,000. Security deposit is fully refundable.
BankAmericard Secured credit card24.49% variable APR applies to all balance transfers.3% of each transaction, minimum $10. $0 annual fee.Minimum security deposit is $300, maximum is $4,900. Security deposits are fully refundable.
Citi® Secured Mastercard®23.99% introductory variable APR for balance transfers completed within the first two months.$5 or 3%, whichever is greater. $0 annual fee.Minimum $200 security deposit, maximum credit limit of $2,500. You won’t qualify if you have a bankruptcy filing in the last two years.

Pros and cons of transferring a balance with poor credit

A secured card could help make your debt more manageable. Making payments on time can help to build or rebuild your credit score. That could make it easier for you to become eligible for an unsecured credit card down the line.

The catch is that to transfer a balance to a secured credit card, you’ll need to offer a cash deposit to open the account. Both Weitz and Tayne agree that if you have the money for the deposit, it might make more sense to use it to pay down the debt and forgo a balance transfer.

Whether you should do that or not depends on which cards you can qualify for and the APR you’ll pay for a balance transfer.

None of the cards listed above, for example, offer a 0% introductory APR on balance transfers. Even the very lowest rates are still around 10%, and those are good only for the first six months. If you can’t pay off your balance within that time frame, you may end up with a higher rate than you had before the transfer.

That’s not the only cost to keep in mind.

“Balance transfers may not be the best way to handle debt with a bad credit score because you would have to pay a balance transfer fee and would be still paying interest on your debt,” says Tayne.

You also have to consider what you might be trading off if you’re transferring debt from an unsecured card to a secured one, says Tyler Martin, a certified public accountant and founder of Financial You. If you put up a large deposit to open a secured credit card for a balance transfer, then default on the account, you wouldn’t get that cash back.

Consider other ways to manage high-interest debt

While researching balance transfer offers, look into alternatives for managing debt.

“Balance transfer cards are an option, but really only advisable if the amount is low and you can pay it off within three to six months,” says Weitz.

He suggests a debt consolidation loan as a way to streamline and pay off debt. Ideally, you’d be able to get a loan with a lower APR than you’re currently paying, without having to offer a deposit or collateral.

If you’re married, you might also talk to your spouse about allowing you to transfer a balance to one of their cards. They may qualify for more favorable balance transfer terms if they have a good or excellent credit rating.

Regardless of whether you decide to transfer a balance to a secured card, take out a loan or ask your spouse to transfer a balance, look at it as an opportunity to make a fresh start financially.

“If someone hasn’t changed their money habits, usually they compound the problem,” says Martin.

In other words, don’t just focus on getting a better deal on your debt. Also look at what led to bad credit issues to begin with.

Addressing those issues as you restructure your debt can help you avoid repeating past credit mistakes, says Martin.

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

What’s up next?

In Balance Transfers

Can you use one credit card to pay off another?

Paying one credit card’s debt with another card is not exactly possible, but that doesn’t mean you can’t do a balance transfer to avoid paying interest on that debt. Read on to see the pros and cons of a balance transfer, along with tips to do it right.

Published: December 11, 2019

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